A corporate minute book is essential to any corporation’s record-keeping documentation. Therefore, every corporation must ensure that they comply with the applicable legislation. In Ontario, it is not only considered to be a best practice but it is required by law that a corporation’s minute book remains accurate and up-to-date. A well-organized corporate minute book protects the corporation, its directors and officers from potential legal liability and penalties, and it also shows the corporation’s commitment to their responsibilities, accountability and transparency.
This blog will explain what a corporate minute book is, why it is important, the consequences of not maintaining an accurate corporate minute book, and how working with an experienced business lawyer can help a corporation ensure that their corporate minute book remains compliant with the law.
Whether an incorporated company is a small, local store, or a large business operating several locations, a corporate minute book provides foundational information for the corporation throughout its lifetime.
A corporate minute book is necessary for any company operating in Ontario. Section 139(1) of the Ontario Business Corporations Act permits a corporate minute book to either be in the form of a physical object, such as a binder, or an electronic format. It contains corporate information and acts as a historical record of all key decisions and actions taken by the company’s board of directors and shareholders. Section 140 of the Ontario Business Corporations Act requires that a corporate minute book contain a compilation of:
- minutes from meetings;
- resolutions passed;
- articles of incorporation;
- shareholder agreements;
- register of directors;
- securities register; and
- other official records.
In Ontario, section 140 of the Ontario Business Corporations Act requires every corporation, regardless of size, to prepare, maintain, and update certain records at its registered office or another location designated by its directors.
The information contained within a corporate minute book can be useful for legal and regulatory purposes, and it must be available for inspection by directors, officers, shareholders, and other authorized parties. With all corporate records stored in a central location, it can also illustrate the corporation’s evolution through time and can help resolve any disputes or conflicts that may arise. An accurate and organized corporate minute book can help attract potential investors and demonstrate a corporation’s credibility and trust with its stakeholders.
Ontario law requires that each corporation maintains a corporate minute book. Failure to comply with this requirement may result in unnecessary penalties, fines, or legal disputes against the corporation. For example, section 256 of the Ontario Business Corporations Act states that an incomplete or inaccurate minute book may be considered to be a “misrepresentation,” which can result in a finding of liability by the corporation and its directors. Such an offence can lead to financial consequences or a term of imprisonment.
Moreover, an unorganized or inaccurate corporate minute book may result in a tax audit by the Canada Revenue Agency. At Willis Business Law, our lawyers provide clients with trusted advice and comprehensive strategies to ensure that corporations are not subject to costly business disruptions or other consequences.
Many events could trigger a corporate minute book update. For instance, if the corporation is subject to an upcoming major event, such as a significant investment or merger, a business lawyer can help a corporation limit its liability exposure and ensure that all compliance requirements are adhered to so that the transaction can close smoothly. Changes to the directors, officers, or shareholders of the corporation must be reflected in the corporate minute book, in addition to changes in the location of a corporation’s registered office.
When a triggering event occurs, the corporation must update the corporate minute book through a resolution of the directors and shareholders.
There are several components of a corporate minute book which should also be reviewed and updated on an annual basis, such as:
- appointments of directors and officers;
- records of the previous year’s approved financial statements;
- records of the previous year’s declared dividends, management bonuses, and shareholder loans; and
- records of the previous year’s important corporate developments, such as share transfers.
Despite the law requiring every corporation to prepare and maintain a corporate minute book, it is not uncommon for a company to be operating without a corporate minute book. While it is recommended to prepare a corporate minute book during the incorporation of a company, one may be reconstructed to include statutory declarations, supporting resolutions, and any other necessary records.
In cases where a corporation has a minute book but it does not accurately reflect the current circumstances of the company, it is possible to rectify the resolutions to bring the minute book back into good standing.
If you require assistance with updating resolutions or preparing a new corporate minute book, contact a trusted corporate lawyer for assistance.
At Willis Business Law, our skilled business lawyers regularly guide and advise our corporate clients on their corporation’s obligations and responsibilities, which include
s corporate minute book compliance. Our business law team understands that it is essential to ensure that corporate minute books are up-to-date, accurate and organized. We provide our clients with corporate minute book reviews and ensure that no compliance requirement has gone overlooked.
Willis Business Law is located in the heart of Windsor’s financial district. Our lawyers serve a wide range of public and private clients throughout Windsor-Essex County and the surrounding areas with a variety of business, employment and labour law needs. Contact us at 519-945-5470 or complete our online form to schedule a consultation with a member of our business law team to learn how we can assist you.